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Em Morley

Renters (Reform) Bill to cost letting agents £278.7m according to government

Published On: July 25, 2023 at 2:58 pm

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Categories: Landlord News,Lettings News,Tenant News

Automated payment specialists PayProp have commented on the projected £278m cost of the Renters (Reform) Bill to letting agents.

The recently revealed estimate in the Renters (Reform) Bill Impact Assessment, published by the Department for Levelling Up, Housing & Communities, represents “costs to letting agents of reduced use by landlords” due to changes from assured shorthold tenancies to periodic tenancies and the removal of Section 21 resulting in fewer tenants moving.

The costs, estimated over 10 years, do not take into account the time agents will have to spend familiarising themselves with the new measures contained within the Bill. However, according to the document, the Government states agents will benefit from the Property Portal, as they will be able to register on behalf of landlords and charge for this service.

The Impact Assessment goes on to conclude that the main costs of the Renters (Reform) Bill will be borne by landlords and that “the estimated net cost to landlords is £10 per rented property annually”. 

However, at a recent Levelling Up, Housing and Communities Committee oral evidence session, Rachel Maclean MP, Minister of State for Housing and Planning, admitted that it is the department’s intention to introduce measures currently missing from the Bill, including the Decent Homes Standard, as an amendment in the House of Commons. While MPs will have time to scrutinise any amendments, it is unclear if the Government will publish a revised Impact Assessment to truly reflect the costs of any measures added in this way.

Independent review

When introducing a Bill to parliament, the Government has to publish an impact assessment outlining the measures in the Bill, their estimated effects and any associated costs. This report is then scrutinised by the independent regulatory scrutiny body for the UK Government, the Regulatory Policy Committee

While this committee has rated the Renter’s (Reform) Bill Impact Assessment “Fit for purpose”, it judged the reasoning behind the measures as “Weak” and the cost-benefit analysis “Very weak”. The committee also questioned whether “the reforms will introduce additional barriers to entry for new landlords and whether they will restrict investment into the PRS (and if this will impact on future supply)”.

Opportunities for agents, but details needed from government

“Let-only agencies will rightly be concerned about potentially losing £278.7m because of the Renter’s (Reform) Bill,” says Neil Cobbold, Managing Director, PayProp UK. “But savvy agents will have already spotted the opportunity in the proposed regulatory changes.”

“It will be key to convert your existing let-only landlords into fully-managed clients. Charging landlords a fee for services including rent collection, maintenance and compliance with the Renters (Reform) Bill and the hundreds of other rules that govern the private rented sector, will boost your agency’s bottom line.

“However, for agents and landlords to properly assess the impact of the Renter’s (Reform) Bill on their businesses, we need more information from the government on how some of the measures will work and when they will take effect. Details on court reforms to speed up evictions, the Property Portal and the new ombudsman will be essential. 

“We also want to see the Department for Levelling Up, Housing & Communities publish a revised Impact Assessment if new measures are introduced as amendments. This will allow all involved in the industry to judge the potential costs and benefits of any changes to the proposed Bill.”

The worst London boroughs for broken boilers

Published On: July 21, 2023 at 1:54 pm

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Categories: Property News

Expert insight from boiler engineer Fair Fix has revealed where Londoners are most likely to fall foul of a dodgy boiler and which boroughs are home to the highest average cost when it comes to sorting the issue. 

So far this year, Fair Fix has been called out to almost 2,000 London households to solve their boiler problems, with the average call out cost coming in at £131. However, the average cost of a boiler repair is somewhat higher at £282, versus just £49 paid by proactive homeowners keeping their boiler serviced rather than waiting until it needs to be repaired. 

When it comes to the boroughs with the highest frequency of call outs, Greenwich tops the table, accounting for 11% of all boiler issues reported so far in 2023.

One in ten boiler problems have been located in Bromley so far this year, with Tower Hamlets and Lewisham also accounting for 8% of all busted boilers across the capital. 

Lewisham, Lambeth, Bexley, Newham, Croydon, Wandsworth and Southwark also rank within the top ten. 

However, it’s Camden where a busted boiler spells bad news for homeowners when it comes to the cost required to remedy the issue. While the borough has accounted for just 2% of all required boiler repairs so far this year, the average price to get a boiler back in action sits at a hefty £500.

In Harrow (£490), this cost also sits at almost £500, with Sutton (£470), Hackney (£439) and Barnet (£433) coming in above £400 on average. 

Bromley (£321), Tower Hamlets (£279), Lewisham (£259), Newham (£242) and Wandsworth (£231) complete the most expensive London boroughs when it comes to the cost of repairing a faulty boiler so far this year.

Tyrone Ekrem, founder of Fair Fix, comments: “The boiler is the heart of our home and without it things can slowly grind to a standstill, so fixing any issues encountered is often of the utmost importance to homeowners. 

“So far this year, we’ve already been called out to thousands of homes across the capital to help and while some boroughs have a higher number of bust boilers compared to others, it’s the cost that is often the primary concern and understandably so in the current environment. 

“Many companies make their money based on their hourly charge and this can lead to a rather lethargic approach to sorting the issue at speed. We’ve put a stop to this by introducing a fixed price model so there’s no nasty surprises. 

“Of course, the unfortunate reality is that some households will pay more than others due to the requirement for additional parts. In this instance, make sure you opt for a company that will only charge you the cost, without ramping up the cost of parts to make an additional profit for themselves.”

Inventories hold the key to renting homes with pets, says AIIC boss

Published On: July 18, 2023 at 3:41 pm

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Categories: Landlord News,Lettings News

Inventories will be the last line of defence for landlords worried about having to allow pets in their rented properties, according to one industry leader.

Daniel Evans, chair of the Association of Independent Inventory Clerks (AIIC), comments: “A detailed inventory showing the condition of a property at the start of the tenancy agreement is the only way a landlord can be sure of the extent of any damage which may have been done by a pet.”

The new Renters (Reform) Bill, currently going through Parliament, has been described as the most radical piece of legislation affecting the Private Rented Sector (PRS) for a generation. It is intended to redress the balance of power between landlord and tenant.

One of the most controversial proposals is to make it easier for tenants to keep pets in rented properties. All they need is written permission from landlords but that permission must not be unreasonably withheld.

Denying permission

As things stand at the moment, landlords can ban tenants from keeping pets as part of their tenancy agreement.

But if the reform is passed, landlords will have to consider all requests from tenants who wish to keep a pet at the property and they will be required to allow or deny permission within 42 days in writing. 

If a landlord refuses a pet request and tenants decide to challenge the decision, the matter could be referred to the courts or a newly-created PRS Ombudsman.

Evans said: “A professional, independent, inventory is vital for any successful tenancy if disputes are to be avoided further down the line. But if more tenants are going to be allowed to keep pets, the danger of additional property damage only increases.

“Of course, most pet owners are responsible people but with the best will in the world, there is always a risk of damage when animals are left in properties.

“Any dispute may well centre around what constitutes fair wear and tear. The only way to resolve that is to have accurate documentation and photographic representation of the state of the property when the tenant moved in.”

Included among the provisions of the new reforms is a clause allowing landlords to request that the tenant buys insurance to cover their pets for property damage or organise their own insurance which would be paid for by the tenants.

In years gone by, landlords could have charged a higher deposit for pet-owning tenants but deposits have been capped at five weeks’ rent since 2019.

Necessary evidence

Insurance cover will be helpful,” said Evans. “But sometimes pet damage is not discovered immediately – it may be weeks before it comes to light. 

“Or maybe the tenant hasn’t kept up with the insurance premiums? In those circumstances the landlord will be looking to the tenant’s deposit to make good the damage. If that happens, the inventory will provide the necessary evidence to prove or disprove the case.

“The same may be true of the quality of décor or cleanliness throughout the property itself, or in the surrounding gardens or outbuildings, if they form part of the let.

“In some cases, the best way to deal with this may be through more regular property inspections. Who better to conduct those than the professional clerk who drew up the check-in inventory?”

The Bill is currently at second reading. Before it becomes law it needs to pass a committee stage, report stage, and third reading in the Commons before going through the same process in the House of Lords.

Buy-to-let arrears worsening at faster rate than residential, says specialist property lender

Published On: July 12, 2023 at 9:15 am

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Categories: Landlord News

The latest research by specialist property lending experts Octane Capital has shown that landlords are feeling the pinch, as cases of arrears in the buy-to-let sector are worsening at a faster rate than for homeowners.

Octane Capital analysed industry figures on the number of mortgages that have fallen into arrears by 2.5% or more of the mortgage balance, comparing the split between the buy-to-let and residential sectors and how each compares to the pre-pandemic market. 

Buy-to-let arrears are increasing

Cases of buy-to-let arrears of more than 2.5% of the loan amount have risen by 42.6% in four years, rising from 4,930 in Q1 2019 to 7,030 in Q1 2023.

Over the same period cases of arrears for homeowners of more than 2.5% have actually declined by -8.6%, from 83,870 in the first quarter of 2019 to 76,630 in the equivalent quarter this year.

This suggests that fewer landlords are being shielded from the current economic climate, with both mortgage rates and energy prices increasing at a faster rate than rents.

Homeowners still more at risk

In the first quarter of this year there were some 76,630 homeowners in arrears of 2.5% or more of their mortgage balance. While small, this accounted for 0.87% of total homeowner loans outstanding.

This proportion has hovered around this mark for the past four years, peaking at 0.94% during the first quarter of 2021.

In contrast, the number of landlords in arrears of 2.5% or more of their mortgage balance totalled 7,030 during Q1 of this year and accounted for 0.34% of total outstanding buy-to-let loans. 

However, while this proportion is more than half that of owner-occupiers, it is the highest total number seen since Q1 2019, as well as the highest proportion of all buy-to-let loans, with the exception of Q4, 2022, when it also sat at 0.34%.

Mortgage forbearance

While arrears are far from out of control, a number of mortgage holders are likely to struggle when they remortgage, with typical 5-year fixed mortgage rates now climbing above 6%.

Chancellor Jeremy Hunt is introducing a mortgage charter in a bid to reassure mortgage holders that their lenders will support them in these difficult times.

As part of the measures, anybody worried about their mortgage repayments will be able to switch to an interest-only mortgage for six months without impacting their credit score.

Meanwhile no customer can be repossessed until 12 months after their first missed payment, giving them time to get their finances back in order.

Jonathan Samuels, CEO of Octane Capital, comments: “It’s certainly a worrisome time for the property market, with mortgage rates and high inflation stretching people’s affordability to the limit.

“It’s striking that buy-to-let landlords are becoming less shielded over time from the economic conditions, suggesting they are unable to entirely recoup their lost income in the form of higher rents.

“The research suggests levels of arrears are in no way out of control however, so there’s no need to be too doom and gloom about the state of the housing market.

“The Chancellor’s mortgage forbearance measures are designed to reassure people who are worried about the impact of rising rates, and it’s welcome these measures have been introduced before the horse has bolted – cases of arrears need to be tackled before people fall into trouble.

“We’d still recommend mortgage holders to keep paying their loans as normal unless they are in need of emergency action, as measures like interest-only loans will only result in higher payments down the line to compensate.”

MPs call on Government to act to turn empty buildings into truly affordable homes

Published On: July 11, 2023 at 8:21 am

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Categories: Property News,Tenant News

Two All Party Groups of MPs and Peers have called on the Government to act to turn empty buildings into good quality, genuinely affordable homes to help end the housing and homelessness crisis. 

Publishing the report from their joint inquiry into repurposing commercial properties to become residential, the All-Party Parliamentary Groups (APPGs) for Housing Market and Delivery and for Ending Homelessness found that there is significant potential for housing supply to be increased this way, providing there are safeguards in place to ensure that the homes delivered are of high quality and genuinely affordable.

During their inquiry, MPs heard that from empty local authority buildings alone there is the opportunity to create 20,000 more homes in England. This does not include the potential for conversions from the empty commercial properties owned by the private sector. Overall, 14% of retail unit space and 7% of office space is currently vacant.

The MPs reviewed evidence from housing and homelessness organisations, local government, planning experts and developers. There were three areas that witnesses agreed required further government action for conversions to be successful and prevent repeats of poor-quality development that have been seen in the past.

The first was that standards need to be strengthened. Amongst other recommendations, the groups are calling on the Government to implement the ‘Healthy Homes Principles’ to ensure high quality homes. These are a set of standards which would apply to all new housing, including conversions, and include access to amenities such as shops, schools, GPs, green spaces and transport, fire safety, access to natural light, and ensuring that homes are warm and well-ventilated to avoid damp and mould issues.

Secondly, both APPGs are calling for all conversions to be required to make contributions towards genuinely affordable housing to help meet local need and tackle homelessness. The Government has already signalled its intent to do this through the Levelling Up Bill, but the MPs are calling for the measures to be brought forward to deliver benefits in the immediate term.

Finally, the groups are calling for clearer guidance on ways in which local authorities can have greater influence over the types of conversions that take place in their area, to ensure that they align with local housing and economic development plans.

Ben Everitt, Chair of the APPG for Housing Market and Delivery, comments: “We wanted to look at creative housing supply solutions that are available in the short-term, and hope that the Government will take forward our recommendations, which are both practical and pragmatic.

“This includes publishing data on the number of commercial properties that have been vacant for over two years and requiring local authorities to report on vacant buildings in their local areas. This would establish a clear picture of the potential scale of empty commercial properties which could be converted into affordable housing which is so desperately needed.”

Bob Blackman, Co-Chair of the APPG for Ending Homelessness, comments: “The report comes against a backdrop of a severe shortage of affordable housing, which is a core driver of homelessness. We have heard from witnesses that there is significant scope to repurpose empty buildings to help ease the housing crisis.

“Taken together, the recommendations from this inquiry will ensure that conversions are of high quality and contribute to creating places people want to live, rather than making the housing and homelessness crisis worse.”

Florence Eshalomi, Co-Chair of the APPG for Ending Homelessness, comments: “We heard that conversions are best done when they are collaborative, particularly with the involvement of local authorities, housing associations and other socially minded organisations.

“To enable not for profit and community-led organisations to make use of the potential to convert empty commercial property into residential use, both APPGs would support methods to incentivise high-quality and consortia approaches.”

Independent landlords ‘vital’ to a fair rental market housing secretary tells NRLA

Published On: July 4, 2023 at 7:59 am

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Categories: Landlord News,Lettings News

Independent landlords are ‘vital’ to ensuring a fair and functioning private rented sector, the Housing Secretary has said.

Writing exclusively for the National Residential Landlords Association (NRLA), Michael Gove spoke of the importance of landlords in providing tenants “with flexibility and choice, and the value for money options that go with them.”

In his article for the NRLA’s members magazine, the Minister explained the Government’s plans to reform the sector following publication of the Renters (Reform) Bill. 

Noting that there are few relationships as important as those between a landlord and tenant, he spoke of the common interests both have in a property as being: “a place that can be at the same time a home and an investment, a valued asset and precious security, a shelter and haven.” “It is vital”, he said, “that these relationships work for everyone, and that we strive to strike a balance for all.”

Focussing on the Government’s plans to reform the sector, which includes ending Section 21 repossessions, the Secretary of State warned that in the minority of cases where relationships between landlords and tenants’ breakdown “it is important that the law is there for the victim – whether tenant or landlord.” He pledged to provide “more comprehensive grounds for landlords to recover properties” and to make it “easier to repossess them where tenants are at fault.”

The Minister went on to pledge to improve the system where repossession cases end up in courts, citing the use of “digital platforms” as a way of speeding up the processing of legitimate repossession claims.

The Secretary of State concluded by declaring that the Government looked forward to working closely with the NRLA “to shape the sector for the good of landlords, and tenants, right across the country.”

Responding to the article, Ben Beadle, Chief Executive of the NRLA, said: “We welcome the Housing Secretary’s commitments, and his recognition of the importance of individual landlords. As he rightly notes, the Renters (Reform) Bill needs to work for responsible landlords every bit as much as tenants. Without this it will serve only to exacerbate the rental housing shortage many tenants are now facing.

“The NRLA will continue to work closely with ministers to ensure the details of the Bill work for all. This includes campaigning for improvements to the courts system to ensure landlords are not left for months on end where they have a legitimate reason to repossess a property.”